The Indonesian government has thrown in the towel in its fight to stop the ‘mud volcano’ that has devastated a huge area in East Java.

“The government has given up in terms of efforts to stop the mudflow, but will never give up when it comes to taking care of the people,” Reuters quotes vice president Jusuf Kalla as saying.

The government had previously tried dropping ‘choke chains’ into the mud (see Nature) but this has failed to slow the eruption, which some have blamed on drilling in the region. (For more see: Mud volcano floods Java, Java mud volcano seems unstoppable.)

Australian energy firm Santos owns 18% of the gas drilling venture in the region and has been forced onto the defensive following a leaked UN Environment Programme report that put the economic damage of the mud volcano at 3.4 billion dollars.

AFP says it could cost Santos “830 million dollars [US$670m], the report said, while the firm has declared provisions of just 88.5 million dollars to the Australian Stock Exchange to cover the clean-up cost”. Bloomberg notes that Santos has “dropped 57 cents, or 2.9 percent, to A$18.80 in Sydney trading, the largest decline since Sept. 4”.

The study also suggests that the only way to deal with the problem might be shipping the mud 14 km to the ocean and turning it into wetland.

In a statement the company said:

Santos is not in a position to comment specifically on the UNEP report. However, given the conditions at site and current activities being conducted, Santos believes that the provision remains an appropriate estimate of its potential liability associated with the incident. As Santos has indicated previously, the situation remains dynamic, complex and uncertain.